Chapter 5: Competitive Rivalry and Competitive Dynamics 167
international markets. (Recently, FedEx was generating
48 percent of revenue internationally, while UPS was
earning 22 percent of its revenue from international mar-
kets.) Meanwhile, UPS concentrates more on the entire
value chain while competing domestically. FedEx is the
world’s largest international air shipping firm, while UPS
is the world’s largest package delivery company.
There are many actions the firms have recently taken
to sharpen their ability to outcompete their primary
competitor. In mid-2013, FedEx learned that its contract
to fly domestic mail for the U.S. Postal Service had been
selected for renewal. UPS also bid on the contract, and
thus it lost this competitive battle to its rival. To support
its strength in logistics as part of the entire supply chain,
UPS recently agreed to buy “Hungary-based pharmaceu-
tical-logistics company Cemelog Zrt for an undisclosed
amount in a deal to strengthen its health-care business
in Europe, giving it access to the increasingly import-
ant markets of Central and Eastern Europe.” UPS is also
emphasizing trans-border European Union services as a
growth engine for the foreseeable future. To enhance its
ability to compete against UPS and other rivals as well,
FedEx is restructuring some of its operations to increase
efficiency. Similarly, the firm is increasing its emphasis
on finding ways for its independent express, ground, and
freight networks to work together more synergistically.
Although the rivalry between FedEx and UPS is
intense and aggressive, it is also likely that this rivalry
makes each firm stronger and more agile because each
has to be at its best in order to outperform the other.
Thus in many ways, each of these firms is a “good com-
petitor” for the other one.
Sources: 2013, FedEx Corp., Standard & Poor’s Stock Report, http://www.
standardandpoors.com, May 25; 2013; United Parcel Service, Inc., Standard
& Poor’s Stock Report, http://www.standardandpoors.com, May 25; L. Eaton, 2013,
FedEx CEO: Truck fleets to shift to natural gas from diesel, Wall Street
Journal, http://www.wsj.com, March 8; V. Mock, 2013, UPS to appeal EU’s block of
TNT merger, Wall Street Journal, http://www.wsj.com, April 7; B. Morris &
B. Sechler, 2013, FedEx customers like slower and cheaper, Wall Street Journal,
http://www.wsj.com, March 20; B. Sechler, 2013, Online shopping boosts profit for
UPS, Wall Street Journal, http://www.wsj.com, April 25; B. Sechler, 2013, FedEx
fends off rivals for U.S. Postal, Wall Street Journal, http://www.wsj.com, April 23.Case Discussion Questions
- FedEx and UPS have many similar resources and compete
across many of the same markets. How are they different?
Stated differently, how do they differentiate themselves? - What are some of the major and unique strategic actions taken
by each firm? Have these actions been successful?
3. Based on information in the case and from your research,
which of these firms do you predict will be the most successful
in the future? Please explain your reasons.
NOTES
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